The Myth of Scarcity
If the price of Crypto art is a collective hallucination how do you determine value?
If the price of Crypto art is a collective hallucination how do you determine value?
Interest in the Crypto Art scene is growing exponentially, “NFTs” is trending on Twitter, FOMO is reaching record highs & Flipping your way to F U Money & financial independence can take less than a year. At this rate Crypto Artists might set off a property boom as they rush to buy houses.
Never in the history of art have so many artists been able to go from “I think I’ll try this…….to I’m buying a house now” so fast.
Never in the history of art have so many collectors gone from “what’s this?……to I have over 1,000 NFTs and I’m just starting”
I love the irony that the Pandemic & Crypto Art has created a “GOLD RUSH”
The Gold Rush, 1925
I love the art by FEWOCiOUS, it’s the real deal. A young artist with a distinctive vision, consistently good and inventive art, a great work ethic & commitment, who has an exuberant and infectious personality. If you’re investing in Crypto art, then investing in FEWOCiOUS is a no brainer, even if you think the prices are already too high, they’re not.
Decades ago I made that mistake thinking that the artist Jenny Saville’s prices were too high. Jenny Saville was under 30 years of age and set a new all time high price of $500,000 for one of her paintings, an unheard of thing in those times. The logical thought was to consider she had many decades left to paint in her life and how much higher can they go after moving from About $6,000 a few years earlier to $500,000?
Jenny Saville (b. 1970) “Reverse” (2002-3). Oil paint on canvas, 2134 x 2438 mm© Jenny Saville. Courtesy of the artist and Gagosian
Well she’s 50 years old now and besides her art being brilliant, she also benefitted by the “Gagosian effect”, the Crypto Art world equivalent is the “Nifty Gateway effect”. Jenny Saville’s set a record price for her art in 2018 of $12,400,000 for one of her paintings at Sotheby’s London, the highest price for a living female artist.
What stole the media limelight that same night was Banksy’s self shredding “little girl with a balloon” stunt after it reached a $1,300,000 bid. You gotta love a good gimmick.
…anyway back on topic.
The most bandied about words in the NFT scene are “Rare” & “Scarce”
They have different meanings
Rare; seldom occurring or found
Scarce; deficient in quantity or number compared with the demand
I suppose the use of the word “rare” in the crypto art community originated from “Rare Pepes”, one of the earliest NFTs made. That’s an entirely different rabbit hole, if you want to go down there then Artnome’s post is best Rare Pepe Wallet & The Birth Of CryptoArt
Whilst I’m here I can’t help but crack up (excuse the pun) every time I see TWERKY PEPE’s , I think they’re hilariously good fun Twerky Pepe website
Since we’re talking value & investing Twerky Pepes have shot into the consciousness of Crypto Art collectors selling 45.22 ETH in the last 7 days and over 82 ETH in the few weeks they were conceived. Who would begrudge anyone making the equivalent of an executive yearly income in a few weeks making such fun things? Twerky Pepe is frens with collectors, I say buy for shits and giggles….and investment.
Twerky Pepe #30, Twerky Clay 1/1 , owner ROBNESS who has placed a 500ETH price to sell. Sure he’s either drunk or dreaming, but who knows who has $913,597.20 burning a hole in their pocket?
Twerky Pepe is Crypto Art’s self referential meme machine, a chronicler of Crypto Currencies and the Crypto Art space utilising good humoured silliness and tokenising it as art. Twerking the razor fine line between mocking something and simultaneously appreciating it.
…anyway back on topic.
Damien Hirst, that’s right we’ve segued from Twerky Pepes to Damien Hirst whose numerous spot paintings averaging a couple of million dollars a pop whilst all the time inferring they were scarce? It took the 2012 exhibition of the complete spot paintings held in 11 Gagosian Galleries to prove that 11 galleries were not enough to exhibit the 1,400 dot paintings created.
But its Hirst’s edition prints I want to talk about, my girlfriend wanted us to buy one 20 years ago for a I think about $600-$700, I looked at the edition size of 500 prints and said “not worth it”. Never underestimate the size of the art market and its ability to absorb huge numbers of artworks.
Today USD $24,383
So, are NFTs Scarce; deficient in quantity or number compared with the demand?
Thats the question that’s been troubling me for some time and I think the answer is NFTs are not scarce, instead they’re underpriced, often deliberately underpriced!
The sale of NFTs are also subjected to FOMO creating practices primarily used to draw new people in, rather than make immediate profits.
I wrote about Nifty Gateway’s persuasive modus operandi here, Never look a gift horse, or a bull in the mouth.
In the traditional art world, the mega galleries price their top artist at nose bleeding levels for collectors. New record prices filter through every level of an artist’s production and no fucks are given to anyone cannot afford it.
The only consideration to affordability apart from smaller artworks (and there’s no such thing as smaller NFTs) is working in another medium (works on paper), or multiples which usually means editioned prints, etchings etc.
Nifty Gateway wants to do two things simultaneously, to reach record high NFT prices and also maximise the amount of new collectors buying NFTs. The traditional model of only caring about pushing prices up creates both scenarios in an organic way, however that process takes decades to create a massive & mature art market.
A calendar month is a year in NFTs, a year is a NFT decade and Nifty Gateway wants a massive & mature art market and its not even a year old business.
The answer isn’t more $1 editions, it’s Timed Open Editions and Silent Auctions
Nifty Gateway is the Gagosian Galleries of NFTs, they are the driving force that is generating adoption of NFTs, generating new collectors and artists. More than any other platform. It’s guaranteed success for artists and collectors alike and the gold rush has started.
I absolutely love what they are doing and what they have achieved in record time, but I’m at two minds about one aspect. Is there VALUE & SCARCITY?
Donald Rumsfeld said it best “Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know.”
I love the art world and I’m happy to live there and deal with all the grey areas, but there are some thing I’d like to know.
I like 1/1 NFTs they are SCARCE BY NATURE, especially “hand made”, as opposed to Generative.
I would like 2021 to be the year of the 1/1 NFT and my personal plan is to make only 1/1’s, however talking to Duncan Cock Foster of Nifty Gateway about editioning concepts, he states the obvious problem which is it’ll drive prices way up, only a few NFTs made and only a few collectors would be able to afford/purchase. and their policy is….
Unlike Gagosian Galleries which operates as if their policy is “We will not rest until every Billionaire is collecting our artists and is getting nose bleeds by the high prices”
EDITIONED NFTs are the answer creating a simple pricing equation depending on one factor, RARITY. 1/1’s are priced more than 1/3’s, which are priced more than 1/10’s, which are priced more than 1/100’s & 1/500’s and so on.
But it doesn’t work.
Right now you’re thinking, hang on didn’t you just tell us the edition of 500 Damien Hirst prints are now worth over USD$24,000 each if you can find one?
Yes, but it doesn’t work fast enough. That was 20 years ago and I had weeks, months to mull over my decision whether to buy one of these affordable 500 prints. If Nifty Gateway started doing this, the EXCITEMENT and FOMO would drain away as collectors check, yep still available, a week later, yep still available…a year later, yeah there are still some available. This is not a problem in the traditional art world as its used to moving like a GLACIER, but for Nifty Gateway it would look like failure.
Here’s a trick question, what is the difference between the CAT on the left and the CAT on the right if I told you the CAT on the left is a 1/1 NFT and the CAT on the right is in a NFT edition of 200?
The answer is technically nothing.
Until recently art that was editioned usually meant that it was in another medium, example an oil painting on canvas was 1/1 and an etching on paper could be editioned to over a 100.
Casting in bronze, photography, digital art, NFTs etc are ways of creating multiples that are identical, hence logic says the larger the edition, the lesser the price should be?
Timed Open Editions can become value problematic because the collectors don’t have enough known knowns to make instant value decisions.
The recent 6 minute open edition sale of Anna Zhilyaeva’s art resulted in….
Essentially 3 similar artworks were bought up by collectors without knowing what the ultimate edition size was going to be? They had 2 of the known knowns, an image and a price. As it turned out the most expensive became the largest sized edition and for half the price you could’ve got a rarer artwork. There is another factor, it could be argued the most expensive was the better artwork and over time would be worth far more?
But it doesn’t matter as the Auctioned artwork acts like the anchor pulling up the prices and making everyone happy. These editioned NFTs can be quickly flipped for substantial profits.
So, getting back to the title of this post THE MYTH OF SCARCITY, scarcity being deficient in quantity or number compared with the demand.
Demand is being filled, so technically there is no scarcity, what you have instead is the idea that in all likelihood the NFTs are deliberately underpriced and the collectors see the subsequent increases in prices and dive in.
Is this bad for Crypto Art?
Fuck no!
Nifty Gateway has ramped up its persuasive selling techniques to grow the whole Crypto Art scene as big, as fast & as valuable as possible for it artists and collectors to share in the gains.
Who has time for the traditional art world’s Glacial approach?
One day in the future there will have to be greater price accuracy and the persuasive shenanigans used to grow the crypto art world will go by the way side, but for now everybody enjoying the wild ride in the NFT space should be thankful of Nifty Gateway. *Disclosure I am in no way connected to Nifty Gateway as an artist, collector, or any other way that could be a conflict of interest.
PS, I love and I collect generative crypto art, but it also has a potential structural problem. Simply put the ability to mint hundreds to thousands 1/1’s and sell them on mass. As with all thing incredibly profitable it attracts more wanting to do the same.
Here is the Generative artist’s nightmare 1,000 generative artists each minting 50 editions of 400 original 1/1 NFTs a year… I’ll get the calculator out….1,000 x 50 x 400 / year equals a mere 20 million 1/1 NFTs.
The art world has the capacity to absorb over 10,000 original artworks from the most famous and prolific artists over their entire lifetime, but not 20 million a year from such few artists.
For me, I’ve been working in secret for months on my crypto art, only 1/1’s, each “hand made” to be released soon as part of a multi year art project. Genuine Rarity and Scarcity.
Great read and many good points. So many avenues & audiences will expand from this launch point. Im happy to be creating & building my community within this new artist’s playground.
enjoyable and informative as ever. You touched on what's been bugging the crap out of me since about this space - value. I hope you're going to give the blog members a private peek before you go to market Jim - ha ha